Thirty years of design and innovation highlight's Lenovo's ThinkPad
gettyNot long after I joined Creative Strategies in 1981, I received a call from IBM looking for forecasts on the PC market. At that time, the PC market was in its infancy, and it was anyone's guess then as to its future growth.
However, they had seen a quote I made to a major tech publication stating that I thought PCs could be a significant growth market and be transformational for the business market. I based that theory on my familiarity with the first spreadsheet product on the Apple II called VisiCalc. I saw how large companies bought Apple IIs and VisiCalc for their accounting departments. (Full disclosure- my wife worked for VisiCorp, the company that made VisiCalc; thus, my familiarity with the product was firsthand.)
That led to a set of research assignments from IBM, and for many years I worked with them on various projects related to the growth of the PC market at the product and channel level.
One of the most interesting programs I was asked to help with was the design of their original laptop in late 1985. At that time, IBM only made large PCs with separate monitors, mostly in battleship grey.
Earlier that year, at CEBIT, a major technology show in Hannover, Germany, Toshiba introduced what became the first real commercial clamshell laptop design called the T100.
I was at that CEBIT show and the launch of the T100, and I asked to "borrow" it to help me cover the show. Of course, Toshiba denied this request, although they did get me one to test once I was back in the U.S.
IBM was deeply interested in the Toshiba T100 design, and the IBM design group in Austin, TX asked me to consult on the project. So for about a year, I would go between Austin and Atlanta, where part of IBM's technical design was developed, and Boca Raton, where the marketing strategy was developed.
This led to IBM introducing the 5140 in 1986.
IBM's "luggable" pc, the 5140
IBMThis first product was still in the luggable category of personal computers, but soon after it was released, IBM launched its first series of clamshell-based laptops. IBM's first clamshell
IBM PS/2 L40 SX - IBM's first "clamshell"
IBMwas the IBM PS/2 Model L40 SX.
Most of IBM's earliest models had only minor success until 1992, when IBM introduced its first line of ThinkPad models.
In 1988, the father of the ThinkPad, Arimasa Naitoh, a Lenovo Fellow located in Japan, received a call about the need to spearhead a new portable computing venture in IBM's research center in Yokohama, Japan. At the time, he was based in White Plains, NY but moved back to Japan to develop what has become the iconic ThinkPad line of portable computers.
I got to watch the development of the ThinkPad from the beginning. Mr Naitoh's leadership, assisted by David Hill, who was instrumental in creating the unique ThinkPad design, made IBM at that time one of the most important portable computer companies in the market.
This chart shows the design history of the Thinkpad and why it is still a big part of Lenovo's success in portable computing:
A visual history of ThinkPad's design
LenovoUnder IBM's leadership, the ThinkPad became one of the best-selling laptops in the enterprise. Still, from its introduction to when Lenovo bought IBM's PC business in 2005, they had only sold 25 million ThinkPads.
However, the ThinkPad's growth under Lenovo's leadership has been remarkable. Today, Lenovo has sold over 200 million ThinkPads, and the company continues to innovate around the ThinkPad design to Excellerate it. Although many key players inside Lenovo had a significant impact on ThinkPad's growth, its most considerable thrust and success came under the leadership of Dilip Bhatia, Vice President of Global Marketing, User and Customer Experience, and former Vice President and General Manager of ThinkPad.
A great example of their innovative design and thinking comes with their new line of foldable ThinkPads called the ThinkPad X1 Fold.
Although foldable technology is still in its infancy, Lenovo's willingness to blaze new trails with new and innovative designs has been the trademark of Lenovo's design teams since they first introduced the line of ThinkPads in 1992.
Watching the overall growth of the mobile computing market, especially the birth and evolution of the ThinkPad, has given me a deeper appreciation for the men and women who worked so hard to make portable computing the largest PC market today. And the Lenovo team has played a major role in helping the mobile computing industry grow exponentially over that last few decades.
For those interested in the history of the ThinkPad, I recommend Mr. Naitoh's book on the subject-
How the ThinkPad Changed the World and Is Shaping the Future."
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The Chips Act provides $13.2 billion focused on R&D and workforce development.
DreamstimeAbout the author: Stanley Litow is Accenture professor of the practice at Duke University and a trustee at the State University of New York. He previously served as president of the IBM Foundation and is the co-author of Breaking Barriers: How P-Tech Schools Create a Pathway From High School to College to Career.
Lost in the fights about government spending and inflation, one piece of federal legislation that garnered substantial bipartisan support has already demonstrated evidence of early success.
The Chips Act makes large-scale federal investment in innovative research and manufacturing of microchips. It has already stimulated private-sector investment designed to take the microchip industry from decline in the U.S. to the forefront of economic development. Micron and IBM have announced investments of roughly $120 billion in New York State to build facilities to manufacture and develop innovative microchips. Those announcements follow Intel’s decision to invest $100 billion in Ohio, along with investments of nearly $5 billion from Qualcomm and GlobalFoundries. These decisions made by only five companies won’t be the end.
But what many don’t know about the Chips Act is that its significant federal spending goes beyond manufacturing, innovation, and incentives for research and development. The act provides $13.2 billion focused on R&D and workforce development with a specific investment in education and in science, technology, engineering, and math skills. It will offer a real pipeline from schools, to college, to career for many students. Language in the bill and action in response will specifically focus on education institutions that have been disproportionately left out of growth in STEM education.
While it was clear to many when the legislation was drafted that job growth without investment in workforce development would yield less than was desired, it has not received the attention it should have. Now is the time to change that, and to use the law as a model for further action.
How? A lesson from America’s past, which I gleaned from access to the IBM archives while writing a book, will help put this into context. In 1946, IBM’s then-CEO Tom Watson had lunch with the president of Columbia University, which hosted the company’s first research laboratory on its campus. The lunch was originally arranged for one hour to focus on research. It wound up lasting four hours when the discussion shifted to education and an unprecedented agreement to jointly focus on the development of what was at the time an unheard-of new academic discipline: computer science. The academic discipline was essential to the development of the entire information technology industry. This lengthy lunch helped spread computer science across education institutions around the world, helping to drive a high-growth industry that fueled economic growth for over a half-century.
Set the clock forward. The Chips Act has already stimulated massive commitments from companies to match federal investments with private-sector investment in research, development, and innovative manufacturing. The same kind of public-private partnership is now an opportunity to address improvement in workforce skills and education.
Under the Chips Act, education institutions partnering with the private sector can maximize the billions in federal investment by using the funds to incorporate workplace skills and STEM education into their academic curriculum. It can also ensure that paid internships and experiential learning can be fully integrated into the education experience with companies providing mentors and support for both students and faculty. Students prepared with these skills, postsecondary degrees and credentials will find available jobs in other industries as well, like health care, banking and finance, all of which are currently struggling to find workers with the education and skills needed. If Chips only focused on industry incentives and research with no focus on education and workplace skills, the opportunities created would risk going unfilled.
Education has far too often been a divisive issue. And yet the need for an effective pathway from school to college to career, especially in areas connected to labor-market growth and opportunity, seems to be the issue that unites almost everyone. It’s especially appealing to students who want and deserve a bright future. The Chips Act can be a model for national growth in industries as diverse as information technology, health care, business and finance and even the arts.
Education, business and government leaders are planning to come together for a national education summit focused on pathways from school to college to career in Washington this February. They’ll be looking for examples of success and the policy changes needed to bring them to scale. The Chips Act will be one clear example not only of what to do, but how to do it. But real success will be when the approach linking investment in industry growth with workplace skills and education growth, via public-private collaboration, moves from example to sustainable reform. It is definitely possible.
Guest commentaries like this one are written by authors outside the Barron’s and MarketWatch newsroom. They reflect the perspective and opinions of the authors. Submit commentary proposals and other feedback to ideas@barrons.com.
IBM on Thursday will announce plans to invest $20 billion over the next 10 years on research and development initiatives and semiconductor manufacturing as President Biden visits the company’s campus in New York.
Biden will travel to Poughkeepsie to speak about his economic plan and meet with workers, a White House official said. The president will highlight IBM’s announcement, which comes on the heels of another investment from chip manufacturer Micron in upstate New York.
IBM said its vision for the Poughkeepsie campus is to become “a global hub of the company’s quantum computing development.”
Biden will be joined during the visit by Reps. Sean Patrick Maloney (D-N.Y.), Paul Tonko (D-N.Y.) and Pat Ryan (D-N.Y.).
Biden will also attend fundraisers in New York City and Red Bank, N.J., during Thursday’s trip.
The IBM announcement is the latest economic win for the White House since the passage of the CHIPS and Science Act, which passed with bipartisan support and included more than $50 billion in incentives for manufacturers to build domestic semiconductor plants. It also included more than $80 billion for the National Science Foundation authorized over five years to support innovation and research.
Biden administration officials had for months warned of supply chain and national security risks if Congress did not invest in domestic manufacturing of chips that are used to power computers, cars and major home appliances, arguing the U.S. would become too reliant on China and others for the semiconductors.
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Founded in 1911 as a Computing-Tabulating-Recording Company, International Business Machines (IBM) needs to keep its finger on the pulse of the development of information technology not to be ousted by younger tech giants like Google, Microsoft, Apple, and Amazon. With the advent of the internet, IBM needed to widen the spectrum of its products and services to retain its strong position in the tech field. Although the company lost its dominance, having only a 5% market share in 2021, as opposed to 68% shared by Microsoft, Amazon, and Google, it has many spectacular achievements to its credit. IBM holds more patents than any other technology company and takes pride in employees who have earned five Nobel Prizes, four Turing Awards, five National Medals of Technology, and five National Medals of Science. And it had been the top tech company for longer than any of the titans dominating the market now.
Also called “Big Blue,” IBM indeed has an impressive pedigree. After starting to produce hardware at the beginning of the last century, it thrived in this business for decades and became the leading provider of mainframe computers worldwide. IBM’s gross income had inexorably grown in the last part of the twentieth century, expanding from $14.450 billion earned in 1975 to $71.940 billion made in 1995. The company’s revenue skyrocketed to the record level of $106.9 billion in 2011, after which it has steadily been declining amidst its transition into new technologies and lines of business. To move with the times and survive the competition from other tech titans, IBM gradually shifted its focus from hardware to software and services. It began to devote more energy and money to cloud-based services and cognitive computing. IBM focuses now on offering primarily network services, application services, cloud services, digital workplace services, business processes and operations, technology consulting services, and AI services. IBM Watson, a cognitive system capable of answering questions posed in natural language, has become the company’s high-visibility offering in the technology field. IBM has a strong faith in Watson, promoting the system as a benevolent digital assistant that would help hospitals, offices, factories, and farms. The company’s white paper referred to Watson as “the future of knowing.”
To see how well IBM has prepared for, what it calls, the new age of understanding, study the statistical data presented below.
IBM’s Outstanding Achievements
- In 1891, IBM, then called CTR, invented the computing scale that could show both the weight and the proportionate price of the product simultaneously.
- In 1888, the company invented the Time Clock, a device that records start and end times for hourly employees. Then, it designed the punch card base data processing machines. IBM is also responsible for inventing the magnetic stripe technology and the Universal Product Code.
- IBM designed and developed the first smartphone in the world, launching it in November 1992. Designed by IBM and manufactured by Mitsubishi Electric, the device had a touchscreen, a calculator app, email capability, 2 MB RAM, and 2 MB internal storage. There were about 50,000 of these smartphones sold for $899 a unit.
- IBM also revolutionized the computer industry, inventing DRAM, floppy disk, SQL programming language, ATMs, and hard disk drives.
- IBM also invented the first personal computer, known as the IBM PC. It was launched in August 1981 and acquired by many companies before PCs were commercialized.
- Since 1920, IBM has received 151,302 US patents. In 2019, the company received a staggering amount of 9,262 US patents. A year later, IBM beat the record of most US patents received by a business for 27 consecutive years. In 2021, IBM had 1,811 patents granted, while this year it has so far received 492 patents.
- IBM has long worked with NASA. Although IBM contributed to many missions, the most memorable is landing on the Moon in 1969. IBM’s responsibility was to develop the software and various programs, build computers, and streamline the mission for NASA.
- One of the fascinating inventions of IBM is the Scanning Tunnelling Microscope developed in 1981 for imaging at the atomic level. Gerd Binnig and Heinrich Rohrer received the Noble Prize in Physics in 1986 for the invention.
- IBM developed several chess computers, the most popular of which is Deep Blue. In 1996, Deep Blue beat the chess world champion, Garry Kasparov, who accused IBM of cheating. IBM declined Kasparov’s offer of a rematch.
- IBM invented the ASME (The Anatomic and Symbolic Mapper Engine) that offers a 3D interactive avatar of the human body to doctors in real-time, helping them visualize patients’ medical records.
- Big Blue made LASIK eye surgery mainstream.
- The company invented the IBM 2990 Blood Cell Separator, designed to harvest white blood cells from blood donors to support patients with leukemia. Later, IBM engineers improved the device, introducing its more sophisticated version, IBM 2997.
- IBM offers the IBM LinuxONE for cloud computing solutions. This powerful computer system can manage the work of 1000×86 servers simultaneously on a single platform.
IBM Statistics in 2022
- Over 90% of credit card transactions are processed by IBM mainframes.
- About 80% of global retailers use IBM retail solutions in their stores and for online sales.
- Over 80% of travel reservations are processed through an IBM product.
- Nearly 97% of banks worldwide use IBM products.
- There are 245,000 IBM employees worldwide in 2022.
- IBM employees live in 170 countries.
- There are 130,000 IBM employees in India.
- 3,000 researchers are working in IBM’s fifteen laboratories around the world.
- During the pandemic, between 2020 and 2021, IBM reduced the number of its employees by around 0.24%.
- Over 29% of IBM managers are women.
- There are an average of 108 applications per available job position at the company.
- Every day, IBM handles 70 billion security events.
- Every second, it manages 8.18 million security events.
- Over 27.3 million people use the IBM website every month.
- The IBM website has a bounce rate of 52.66%.
- In 2020, IBM’s earnings hit about $73 billion.
- In 2021, its global revenue diminished by 22%.
- Almost half of IBM’s revenue is generated in the North American market.
- IBM bought Red Hat for $33.4 billion.
- Cognos was purchased by IBM for $4.9 billion in 2008.
- Big Blue acquired SoftLayer Technologies in 2013 reportedly for $2 billion.
- To date, IBM has acquired more than 183 companies.
Facts about IBM’s Incumbent CEO, Arvind Krishna
- Arvind Krishna became IBM’s CEO in 2020, arriving with the mission to reverse the company’s decline. He is expected to create a new line of business that would rediscover IBM’s former glory.
- Before becoming the company’s CEO, Krishna worked as the Senior Vice President for IBM’s cloud and cognitive software. He developed IBM’s security software business.
- Krishna was the general manager of IBM Systems and Technology Group’s development and manufacturing organization. He also managed IBM’s acquisition of Red Hat and supervised its synergy with IBM.
- Krishna is the co-author of 15 patents and has been the editor of IEEE and ACM journals. He has received distinguished alumni awards from IITK and the University of Illinois, where he completed his PhD. His scholarly articles appear in numerous journals.
- Krishna leads the IBM business unit that provides the cloud and data platform. His responsibilities include IBM Research, IBM Cloud, and IBM’s security and Cognitive Application business.
- Krishna guides IBM’s overall strategy in core and emerging technologies including AI, quantum computing, blockchain, cloud platform services, data-driven solutions, and nanotechnology.
- IBM Chairman and CEO Arvind Krishna was paid $17.5 million for 2021, up from $17 million paid in the year before, according to IBM’s 2022 Notice of Annual General Meeting and Proxy Statement.
- In 2021, IBM’s board approved an annual incentive payment of $2.9 million to Krishna for the 2021 performance, which was 98% of the target.
- The estimated net worth of Arvind Krishna was about $27.4 million in June 2022. He also owns over 21,803 units of International Business Machines stock worth over $23,629,581.
Source: Fortune
IBM’s Annual Revenue since 2000
Once an unparalleled tech giant, IBM has been struggling for the last decade. It had to adjust to the changing world by selling its low-margin businesses and investing in high-margin ones. To implement its strategies, Big Blue sold IBM WebSphere Commerce to HCL Technologies in 2018 and a part of the Watson Health business at the beginning of this year. Although IBM’s earnings are still high, they do not reach the levels hit between 2006 and 2012. The company’s annual revenue skyrocketed to $106.9 billion in 2011, whereas it was only $57 billion last year. In the second quarter of 2022, IBM’s earnings dropped below expectations. IBM’s falling fortune is reflected in the table below:
IBM’s Annual Revenue since 2000 (in $US Billion)
| Year | Annual Revenue (in $US Billion) |
| 2000 | $88.4 |
| 2001 | $83.07 |
| 2002 | $81.19 |
| 2003 | $89.13 |
| 2004 | $96.29 |
| 2005 | $91.13 |
| 2006 | $91.42 |
| 2007 | $98.79 |
| 2008 | $103.63 |
| 2009 | $95.76 |
| 2010 | $99.87 |
| 2011 | $106.92 |
| 2012 | $104.51 |
| 2013 | $99.75 |
| 2014 | $92.8 |
| 2015 | $81.74 |
| 2016 | $79.92 |
| 2017 | $79.14 |
| 2018 | $79.59 |
| 2019 | $57.71 |
| 2020 | $55.18 |
| 2021 | $57.35 |
| 2022 (Q1; Q2) | $14.2 billion; $15.5 billion |
IBM’s Annual Revenue by Segment for 2020-2021
Big Blue has repeatedly changed the segment reporting to reflect its move away from being hardware, software, and service company towards becoming a cognitive solutions and cloud platform company. It changed its segment reporting in 2016, 2019, and 2021. The last change was dictated by IBM’s need to align its segment reporting with its platform-centric approach to hybrid cloud and AI. There are presently six segments in IBM’s business: Technology Services and Cloud Platforms, Infrastructure, Software, Consulting, Financing, and Other. In 2021, IBM’s software segment generated $24.14 billion of its global revenue of $57.35 billion. In 2022 so far, the Software division earned $5.77 billion and $6.2 billion, in the first and second quarters, respectively. The Consulting sector brought the company $4.83 billion in Q1 and $4.8 billion in Q2 of the current year. The revenue earned by the Infrastructure segment amounted to $3.22 billion in the first quarter and $4.0 billion in the second quarter. Revenues generated by IBM’s segments in the last two years are shown in the table below:
IBM’s Annual Revenue by Segment for 2020-2021 (in $US billion)
| Segment | 2020 | 2021 |
| Software | $22.93 | $24.14 |
| Consulting | $16.26 | $17.84 |
| Infrastructure | $14.53 | $14.19 |
| Financing | $0.98 | $0.77 |
| Technology Services and Cloud | $25.00 | $28.00 |
| Other | $0.49 | $0.41 |
Source: Statista
Worldwide Market Share of Cloud Infrastructure Providers in Q2 2022
In the second quarter of 2022, IBM’s Cloud Infrastructure had only a 4% share of the worldwide market, lagging behind Amazon, Azure, and Google Cloud. The spending on global cloud infrastructure services soared to $55 billion and thus brought the industry’s total for the twelve months to more than $203.5 billion. Outshining IBM, Amazon and Microsoft together accounted for more than half of cloud infrastructure revenues in the three months that ended on June 30.
These figures show how much Big Blue fell from grace because, in the past, it used to enjoy the leading position. In 2017, IBM reported cloud revenue growth of 33% year-over-year in its first quarter earnings. In that quarter, its cloud revenue jumped to $3.5 billion. IBM’s total cloud revenue over the past 12 months that year hit $41.6 billion and catapulted IBM to the top of the list in the field of enterprise cloud. In the first quarter of 2017, today’s winners were obliged only to trail behind with lower earnings: Microsoft with $14 billion, Amazon with $12.20 billion, and Google with $10 billion. The latest market share of the main providers of cloud infrastructure can be seen in the table below:
Worldwide Market Share of Cloud Infrastructure Providers in Q2 2022
| Company | Market Share |
| AWS | 34% |
| Azure | 21% |
| Google Cloud | 10% |
| Alibaba Cloud | 5% |
| IBM Cloud | 4% |
| Salesforce | 3% |
| Tencent Cloud | 3% |
| Oracle Cloud | 2% |
IBM’s Annual Net Income since 2009
Net income is defined as a company’s net profit or loss after it has accounted for all its revenues, income items, and expenses. IBM’s net income for the quarter ending on June 30, 2022, was $1.292 billion, which constituted a 5.06% jump year-over-year. The company’s net profit for the 12 months ending on June 30, 2022, was $5.588 billion, demonstrating an increase of 4.76% year-over-year. Last year, IBM’s annual net income reached $5.743 billion, a 2.74% surge from 2020. The first year of the pandemic brought IBM a net income of $5.59 billion, which was a whopping 40.73% drop from 2019. In 2019, IBM’s annual net profit was $9.431 billion, an 8.05% advance from 2018. The uneven trajectory of IBM’s annual net income is drawn in the table below:
IBM’s Annual Net Income since 2009 (in $US Billion)
| Year | Net Income in $US Billion |
| 2009 | $13.425 |
| 2010 | $14.833 |
| 2011 | $15.855 |
| 2012 | $16.604 |
| 2013 | $16.483 |
| 2014 | $12.022 |
| 2015 | $13.190 |
| 2016 | $11.872 |
| 2017 | $5.753 |
| 2018 | $8.728 |
| 2019 | $9.431 |
| 2020 | -$5.590 |
| 2021 | $5.743 |
IBM’s Number of Employees Worldwide from 2000 to 2022
IBM is the fifth largest employer in the United States. In 2021, the company employed 282,000 people worldwide. This year, the number of people working for Big Blue dipped to 245,000. As the company has lately been struggling, experiencing drops in its revenues, it is trying to restructure its business and be on par with such tech giants as Amazon, Microsoft, Google, and Apple. Hence the decline in the number of its employees this year. The table below shows how the number of IBM’s employees has changed over the years:
IBM’s Number of Employees Worldwide from 2000 to 2022 (in 1,000s)
| Year | Number of Employees (in 1,000s) |
| 2000 | 316.3 |
| 2001 | 319.88 |
| 2002 | 315.89 |
| 2003 | 319.27 |
| 2004 | 329 |
| 2005 | 329.37 |
| 2006 | 355.77 |
| 2007 | 386.56 |
| 2008 | 398.46 |
| 2009 | 399.41 |
| 2010 | 426.75 |
| 2011 | 433.36 |
| 2012 | 434.25 |
| 2013 | 431.21 |
| 2014 | 379.59 |
| 2015 | 377.76 |
| 2016 | 380.3 |
| 2017 | 366.6 |
| 2018 | 350.6 |
| 2019 | 352.6 |
| 2020 | 345.9 |
| 2021 | 282.1 |
| 2022 | 245 |
Source: Statista
Conclusion
As the world is facing a probable recession, analysts believe that the enterprise tech sector will still continue going strong. People who are tech-savvy will turn to IBM in these unpleasant times to help them survive in a tighter economic environment and use the company’s software, consulting, and infrastructure to work productively during an economic decline. Big Blue can definitely provide the products and services people will need in the near future. IBM’s Q2 2022 results signify that technology spending in such spheres as AI, cloud, automation and networking is steady. The company beat anticipated results in the second quarter and boasted its first double-digit quarterly revenue growth in more than a decade. Automatic calculations conducted at Coinpriceforecast.com inspire faith in the company’s future and the cost of its stock. At the beginning of the year, IBM’s stock price was $116.92. At the time of writing, IBM is trading at $118.81, thus demonstrating a 2% jump from January 2022. Coinpriceforecast.com foresees that by Christmas, IBM will surge to $138. In the first half of 2023, the price of the stock might advance to $145 and end the next year at $155, adding 30% to today’s price. Whether or not these predictions prove to be correct, IBM will surely continue pushing technology and innovation forward, as it has spectacularly done since the beginning of the twentieth century.
Storage News
Joseph F. Kovar
IBM, which three years ago acquired Red Hat, is now moving Red Hat OpenShift Data Foundation and Red Hat Ceph, along with their development teams, into IBM Storage as part of a move to make a bigger play in the software-defined and open-source storage worlds.
IBM Tuesday said it has absorbed storage technology and teams from its Red Hat business to combine them with IBM’s own storage business unit as a way to help clients take advantage of the two without requiring extra integration or having to deal with multiple sales teams.
IBM is integrating Red Hat OpenShift Data Foundation with its IBM Spectrum Fusion and will offer Red Hat Ceph-based storage technologies to its clients in a move to continue Big Blue’s software-defined storage leadership, said Brent Compton, senior director of Data Foundation for Red Hat’s hybrid cloud business.
For IBM, which in mid-2019 acquired Red Hat in a $34-billion deal, the move ensures maximum support for Red Hat OpenShift Data Foundation and Ceph, Compton told CRN.
[Related: 2022 Storage 100: Who’s Got Your Backup?]
“OpenShift Data Foundation and Ceph will become a big part of IBM Storage,” he said. “IBM has been looking for a way to take advantage of Ceph and ODF, and now it can.”
Ceph is an open-source software-defined object storage technology with interfaces for object, block and file storage. Red Hat OpenShift Data Foundation is a software-defined container-native storage that provides cluster data management capabilities as part of the OpenShift container platform.
Scott Baker, chief marketing officer and vice president of IBM hybrid cloud portfolio and product marketing, told CRN the move to combine Red Hat and IBM storage technologies sets the stage for growth in the combined software-defined storage portfolio.
“Customers not only get a choice of where storage runs—at the edge, in the cloud, or on-prem—but will find storage software releases will no longer be tied to the timing of storage hardware releases,” Baker said. “For instance, IBM normally enhances its Spectrum Virtualize or Spectrum Scale with new versions of the IBM FlashSystem. But with software-defined storage, we can drive changes quicker if they’re not tied to hardware releases.”
By bringing Red Hat OpenShift Data Foundation and Ceph into IBM, customers get the opportunity to access unified block, file, and object storage without regard to the real underlying hardware, Baker said.
“They can use Ceph to add the right type of storage depending on the protocol they need,” he said. “Ceph and ODF also simplifies how IBM provides data storage and protection. To do all that with IBM’s storage portfolio takes time. With CEF and ODF as part of IBM Storage, this can get done immediately.”
It really is the best of both worlds, as Red Hat customers will also see strong benefits from IBM Storage, Compton said.
“It’s important to note that IBM will continue to offer OpenShift Data Foundation inside the Red Hat OpenShift Platform Plus hybrid cloud platform,” he said. “So if a customer gets pre-integrated OpenShift Data Foundation inside Red Hat OpenShift Platform Plus, it accelerates their time to market. There’s no need to integrate the storage. This will not change.”
Also, Red Hat OpenShift customers have used Ceph to accelerate their time to scale for years, and Red Hat will continue to sell Ceph, Compton said.
“But by moving Ceph to IBM Storage, IBM will accelerate development of the storage-specific features,” he said. “Red Hat is not a storage company. So this will accelerate development of unified capabilities.”
IBM’s storage move makes good on the potential many saw with the company’s acquisition of Red Hat, said John Teltsch, chief revenue officer at Converge Technology Solutions, a Gatineau, Quebec-based solution provider and channel partner to both IBM and Red Hat that ranked No. 36 on CRN’s 2022 Solution Provider 500.
“This is something the channel has been waiting for ever since IBM acquired Red Hat,” Teltsch told CRN. “IBM has been doing a lot around software-defined storage. And when you add in Red Hat, it gives us an integrated solutions play. It lets us build an integrated sales team. We don’t have to first talk about IBM storage capabilities, and then bring in our Red Hat team to talk about Red Hat.”
Converge Technology Partners’ IBM and Red Hat sales teams are currently two separate teams, said Teltsch, who joined the company in March from IBM, where he held numerous sales leadership roles, including two years as Big Blue’s channel chief.
“Once IBM and Red Hat storage are together, it gets more simple to sell,” he said. “And it simplifies our training while IBM will have one integrated set of offerings for its clients. This lets us bring the best of Red Hat open-source capabilities with IBM storage. We’re living in a data-driven world. This move simplifies our go-to-market, as well as simplifies the client experience, client engagement, and client adoption.”
Investors this year increasingly turned away from dividend stocks in favor of the rising yields being offered on bonds. Given that investors can now earn a 4.3% return on a 2-year Treasury note, many prefer that guaranteed return to the risks of putting money into the stock market.
International Business Machines (IBM 1.23%) offers a dividend yield that exceeds that bond return. But with a bear market in progress, are investors better served to take a chance on the cloud stock or to take the 4.3% return at virtually zero risk?
IBM and its dividend
IBM didn't participate in the bull market of the 2010s. The stock dropped as its tech businesses suffered a considerable growth slowdown. In an effort to change that, IBM pivoted into the cloud computing sector aggressively, in part via its $34 billion purchase of Red Hat in 2019. Grand View Research forecasts a compound annual growth rate of 16% through 2030 for the cloud industry. Growth like that could certainly help both IBM and its stock.
Also, IBM spun off its managed infrastructure business into a new public company, Kyndryl. This business was less of a fit with the parent company amid its pivot to the cloud. Separating it off should make it easier for IBM to grow its revenue.
Time will tell if these moves can help the stock price recover. Nonetheless, IBM currently pays its shareholders $1.65 per share every quarter, or $6.60 per share annually. At the current stock price, that adds up to a yield of 5.6% per year. Moreover, depending on your financial situation, the IRS may tax your dividends at a lower capital gains rate, which can offer an added advantage.
Additionally, IBM hiked its payout annually for 27 consecutive years, making it a Dividend Aristocrat. That status carries some importance as many income investors will be more inclined to buy and hold IBM stock because of this status. Also, since abandoning Dividend Aristocrat status tends to hurt a stock, management will probably prioritize maintaining it by continuing to raise those payouts.
Investors also can also reinvest their dividend payments into more IBM stock. However, such newly purchased shares will pay you the dividend yield at that time. The return will rise if the stock falls since investors can buy the exact cash return at a lower price. Conversely, cash yields will drop if the stock rises, but those investors still benefit since the stock has increased in value.
What to know about 2-year Treasury notes
U.S. Treasury notes offer more stability than stocks such as IBM. Investors who purchase the 2-year Treasury note receive semiannual interest payments. At the current interest rate of 4.3%, investors will receive a 2.15% cash return on their invested amount in each of the subsequent three six-month periods. In the fourth period, when the note matures, investors receive the final 2.15% payment along with the return of their principal.
Investors should also be aware that bond values can fluctuate. If interest rates drop, the value of the bond will fall; the opposite will happen if rates rise. This affects investors if they decide to sell the bond early. Upon maturity, the note will return to its par (or nominal) value.
Additionally, bond interest payments are subject to federal income tax but exempt from state and local taxes. In some cases, this is higher than taxes on dividends. Still, bond issuers are obligated to make such payments. In contrast, IBM faces no legal obligation to continue its dividend.
Also, like with a stock, investors can reinvest their interest payments into more notes or other forms of Treasury bonds. However, those purchases will be subject to the prevailing interest rates at that time.
IBM or the 2-year Treasury note?
Investors who lack much risk tolerance should choose the Treasury note. Given its guaranteed return, they will not have to worry about volatility.
Nonetheless, for investors comfortable with buying stocks, IBM is a surprisingly strong buy. The cloud industry is in growth mode, which should propel IBM stock to a long-awaited turnaround. Moreover, IBM has repeatedly shown it wants to hold on to its Dividend Aristocrat status. This should deliver its income investors returns that are not only larger than the bonds offer, but also likely to increase in size.
Will Healy has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.
A four-year bachelor’s degree has long been the first rung to climbing America’s corporate ladder.
But the move to prioritize skills over a college education is sweeping through some of America’s largest companies, including Google, EY, Microsoft, and Apple. Strong proponents say the shift helps circumvent a needless barrier to workplace diversity.
“I really do believe an inclusive diverse workforce is better for your company, it’s good for the business,” Ginni Rometty, former IBM CEO, told Fortune Media CEO Alan Murray during a panel last month for Connect, Fortune’s executive education community. “That’s not just altruistic.”
Under Rometty’s leadership in 2016, tech giant IBM coined the term “new collar jobs” in reference to roles that require a specific set of skills rather than a four-year degree. It’s a personal commitment for Rometty, one that hits close to home for the 40-year IBM veteran.
When Rometty was 16, her father left the family, leaving her mother, who’d never worked outside the home, suddenly in the position to provide.
“She had four children and nothing past high school, and she had to get a job to…get us out of this downward spiral,” Rometty recalled to Murray. “What I saw in that was that my mother had aptitude; she wasn’t dumb, she just didn’t have access, and that forever stayed in my mind.”
When Rometty became CEO in 2012 following the Great Recession, the U.S. unemployment rate hovered around 8%. Despite the influx of applicants, she struggled to find employees who were trained in the particular cybersecurity area she was looking for.
“I realized I couldn’t hire them, so I had to start building them,” she said.
In 2011, IBM launched a corporate social responsibility effort called the Pathways in Technology Early College High School (P-TECH) in Brooklyn. It’s since expanded to 11 states in the U.S. and 28 countries.
Through P-TECH, Rometty visited “a very poor high school in a bad neighborhood” that received the company’s support, as well as a community college where IBM was offering help with a technology-based curriculum and internships.
“Voilà! These kids could do the work. I didn’t have [applicants with] college degrees, so I learned that propensity to learn is way more important than just having a degree,” Rometty said.
Realizing the students were fully capable of the tasks that IBM needed moved Rometty to return to the drawing board when it came to IBM’s own application process and whom it was reaching. She said that at the time, 95% of job openings at IBM required a four-year degree. As of January 2021, less than half do, and the company is continuously reevaluating its roles.
For the jobs that now no longer require degrees and instead rely on skills and willingness to learn, IBM had always hired Ph.D. holders from the very best Ivy League schools, Rometty told Murray. But data shows that the degree-less hires for the same jobs performed just as well. “They were more loyal, higher retention, and many went on to get college degrees,” she said.
Rometty has since become cochair of OneTen, a civic organization committed to hiring, promoting, and advancing 1 million Black individuals without four-year degrees within the next 10 years.
If college degrees no longer become compulsory for white-collar jobs, many other qualifications—skills that couldn’t be easily taught in a boot camp, apprenticeship program, or in the first month on the job—could die off, too, University of Virginia Darden School of Business professor Sean Martin told Fortune last year.
“The companies themselves miss out on people that research suggests…might be less entitled, more culturally savvy, more desirous of being there,” Martin said. Rather than pedigree, he added, hiring managers should look for motivation.
That’s certainly the case at IBM. Once the company widened its scope, Rometty said, the propensity to learn quickly became more of an important hiring factor than just a degree.
This story was originally featured on Fortune.com
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“We can‘t be essential unless our partners are skilled in our products and confident in going to their clients with our products and selling them with us and for IBM,” IBM channel chief Kate Woolley said.
IBM has started giving registered members of its PartnerWorld program access to the training, badges and enablement IBM sales employees get along with a new learning hub for accessing materials.
The expansion is part of the Armonk, N.Y.-based tech giant’s investment in its partner program, IBM channel chief Kate Woolley told CRN in an interview.
“We can‘t be essential unless our partners are skilled in our products and confident in going to their clients with our products and selling them with us and for IBM,” said Woolley (pictured), general manager of the IBM ecosystem.
[RELATED: Channel Chief Kate Woolley: ‘No Better Time To Be An IBM Partner’]
Partners now have access to sales and technical badges showing industry expertise, according to a blog post Tuesday. Badges are shareable on LinkedIn and other professional social platforms. IBM sales representatives and partners will receive new content at the same time as it becomes available.
“This is the next step in that journey in terms of making sure that all of our registered partners have access to all of the same training, all of the same enablement materials as IBMers,” Woolley told CRN. “That’s the big message that we want people to hear. And then also in line with continuing to make it easier to do business with IBM, this has all been done through a much improved digital experience in terms of how our partners are able to access and consume.”
Among the materials available to IBM partners are scripts for sales demonstrations, templates for sales presentations and positioning offerings compared to competitors, white papers, analyst reports and solution briefs. Skilling and enablement materials are available through a new learning hub IBM has launched.
“The partners are telling us they want more expertise on their teams in terms of the IBM products that they‘re able to sell and how equipped they are to sell them,” Woolley said. “And as we look at what we’re hearing from clients as well, clients want that. … Our clients are saying, ‘We want more technical expertise. We want more experiential selling. We want IBM’ – and that means the IBM ecosystem as well – ‘to have all of that expertise and to have access to all the right enablement material to be able to engage with us as clients.’”
The company has doubled the number of brand-specialized partner sellers in the ecosystem and increased the number of technical partner sellers by more than 35 percent, according to IBM.
The company’s recent program changes have led to improved deal registration and introduced to partners more than 7,000 potential deals valued at more than $500 million globally, according to IBM. Those numbers are based on IBM sales data from January 2022 to August.
Along with the expanded access to training and enablement resources, Woolley told CRN that another example of aligning the IBM sales force and partners was a single sales kickoff event for employees and partners. A year ago, two separate events were held.
“I want our partners to continue to feel and see this as a big investment in them and representative of how focused we are on the ecosystem and how invested we are,” she said.
IBM Corp. is making some big changes to its data storage services, announcing today that it will bring Red Hat Inc.’s storage products and associates under the “IBM Storage” umbrella.
The aim, IBM said, is to deliver a more consistent application and data storage experience across on-premises and cloud infrastructures. It’s a big move that will see IBM Spectrum Fusion data management software adopt the storage technologies of Red Hat’s OpenShift Data Foundation as its new base layer.
Even more interesting, perhaps, is that the open-source Red Hat Ceph Storage offering will be transformed into a new IBM Ceph storage offering. IBM said this will result in a unified, software-defined storage platform that’s better able to bridge the architectural divide between data centers and cloud computing providers.
The computing giant said the move is in line with its software-defined storage strategy of a “born in the cloud, for the cloud” approach that will unlock bidirectional application and data mobility based on a shared, secure and cloud-scale solution.
IBM Systems General Manager of Storage Denis Kennelly said the shift is designed to streamline the two companies’ portfolios. “By bringing together the teams and integrating our products under one roof, we are accelerating IBM’s hybrid cloud strategy while maintaining commitments to Red Hat’s customers and the open-source community,” he insisted.
The company presented the changes as a big win for customers, saying they will gain access to a more consistent set of storage services that preserve data resilience, security and governance across bare metal, virtualized and containerized environments. More specifically, IBM is promising that customers will have a more unified storage experience for container-based applications running on Red Hat OpenShift, with the ability to use IBM Spectrum Fusion, which is now based on Red Hat OpenShift Data Foundation. Doing so will provide higher performance, greater scale and more automation for OpenShift applications that require block, file and object access to data, the company said.
As for IBM Ceph, the company said this will deliver a more consistent hybrid cloud experience with enterprise-grade scale and resiliency.
Furthermore, by unifying IBM’s and Red Hat’s storage technologies, customers will be able to build a single data lakehouse on IBM Spectrum Scale to aggregate all of their unstructured data in one place. Benefits will include less time spent on maintenance, reduced data movement and redundancy, and more advanced schema management and data governance.
Industry watchers were united in their belief that the changes would be of benefit to customers. Steve McDowell of Moor Insights & Strategy told SiliconANGLE that today’s move makes a lot of sense because it enables IBM to leverage the storage strengths of both companies.
McDowell explained that although IBM Spectrum is considered to be one of the most comprehensive data management platforms around, its foundation predates the rise of cloud-native technologies. On the other hand, he said, Red Hat OpenShift was built from the ground up to support cloud-native workloads.
“IBM is evolving Spectrum Fusion to take the best of Red Hat’s efforts, and is using Red Hat’s storage software as the base for its IBM-branded products moving forward,” McDowell said. “It makes a lot of business sense for IBM to leverage R&D from Red Hat into its more traditionally proprietary systems. It also gives IBM an easy path to better serve the needs of containerized workloads.”
International Data Corp. analyst Ashish Nadkarni said the two companies are now “speaking with one voice on storage” and finally delivering on the synergies between them that were mentioned when IBM acquired Red Hat in 2019.
“The combining of the two storage teams is a win for IT organizations as it brings together the best that both offer: An industry-leading storage systems portfolio meets an industry-leading software-defined data services offering,” Nadkarni said. “This initiative enables IBM and Red Hat to streamline their family of offerings, passing the benefits to their customers.”
IBM also moved to reassure users of Red Hat’s open-source technologies that it will remain fully committed to them following today’s announcements. As part of the deal, IBM will take over Premier Sponsorship of the Ceph Foundation and, along with Red Hat’s teams, continue to drive innovation and development. Both IBM Ceph and Red Hat OpenShift will remain 100% open-source, the company added, and will continue to follow an upstream-first development model.
McDowell said today’s move would likely make some users nervous about the prospect of Red Hat’s technology becoming more proprietary over time. “IBM has been very careful since it acquired Red Hat in 2019 to keep Red Hat’s open-source business segregated from IBM’s branded offerings,” he said. “This is the first time we’re seeing IBM cross that that line, and it’s natural to wonder how blurred those lines will become.”
Still, McDowell said, he’s inclined to believe IBM’s promises as it has been very deliberate about keeping Red Hat’s storage technologies open-source.
“Red Hat OpenShift Data Foundation and Ceph will still be available as they always have, though its evolution will undoubtedly be more strongly guided by the needs of IBM’s storage business,” the analyst continued. “Overall this is a net positive for IBM and its customers. It makes good business sense and there should be minimal impact to Red Hat’s existing community.”
IBM said the first storage solutions to launch under the new IBM Ceph Storage and IBM Spectrum Fusion banners will arrive in the first half of 2023, so users will have plenty of time to digest the changes.
